Activision Blizzard Shares Pop As UK Regulator Drops Deal Concerns

Activision Blizzard Inc. stock was up nearly 6% in afternoon trading Friday after the U.K.‘s Competition and Markets Authority said it was narrowing the scope of concerns that it had about the company’s pending acquisition by Microsoft Corp.

The U.K. regulator, which has been reviewing the deal, said in a Friday release that it has “received a significant amount of new evidence in response to its original provisional findings.”

“Having considered the additional evidence provided, we have now provisionally concluded that the merger will not result in a substantial lessening of competition in console gaming services because the cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action,” said Martin Coleman, chair of the independent panel of experts thats reviewing the deal for the CMA.

One of the greatest concerns of the regulator was that the deal would lessen competition in the console gaming market.

However, since then the Authority has received a large amount of feedback from gaming industry participants, leading to its change of stance. They determined that any gains by Microsoft from withholding s from the Sony Playstation console would be offset by equal or greater costs.

However, Microsoft isnt completely off the hook as the regulators also said that they still have concerns over the impact of the deal on the cloud gaming market. And while Microsoft has been able to sway some competitors to put their stamp of approval on the deal – Nintendo and Nvidia are two notable examples – it has yet to bring its major rival Sony onboard.

The CMA has back then ruled provisionally that Microsoft may need to divest part, or even all of Activision in order to complete the deal. They had no update to that guidance on Friday. Microsoft also faces uncertainty from EU and US regulators, as well as pushback from some tech giants such as Google parent Alphabet.

Activision shares are up by 10.2% since the start of the year.